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Irish jobs growth picks up in Q3.
• Irish jobs growth picks up in Q3.
• Broader spread of job gains becoming evident.
• Many domestic-focussed sectors see healthier employment trend.
• Pace of jobs growth suggests underlying pace of Irish economic growth around 3%.
Jobs data for the third quarter of 2014 suggest that Irish economic conditions continue to improve and, importantly, the upturn is increasingly translating into rising employment in domestic-focussed sectors such as construction, consumer-focussed businesses and healthcare.
The pace of jobs growth in Ireland is solid and, as diagram 1 suggests, bears comparison with recent healthy trends in the US and UK jobs market rather than the sluggish picture in the Euro area. However, this comparison also suggests that the true pace of recovery in the Irish economy at present may be more restrained than implied by GDP growth that is likely to be close to 5% in 2014. Our sense is that the underlying growth rate in the Irish economy may be in the broad region of 3% currently (as it currently is in both the US and UK) and we would expect 2015 to deliver growth closer to 3.5% as domestic spending improves further.
There were 10.4k more people at work in the third quarter of 2014 than three months earlier, an annualised growth rate of 2.2%. This represents a notable pick-up on the pace of job gains in the two preceding quarters (just 0.7k in the first quarter and 4.3k in the second). Our preference is to focus on quarterly rather than annual changes in these data because of a possible concern that the data sample for 2013 could have been affected by adjustments to incorporate Census 2011 results.
A notable feature of the third quarter data is a broadening in the range of sectors showing rising employment on a quarterly basis-10 out of 14 sectors compared to 7 out of 14 in the previous quarter and 5 out of 14 in the first quarter of 2014.
Today’s data also show increasing signs of a pick-up in domestic activity, with notable gains in construction (+3.8k), finance/insurance/real estate (+3.5k), wholesale/retail (+2.2k) and healthcare (+2.4k). However, pockets of weakness including a somewhat surprising fall in employment in hotels and restaurants (-1.8k) and a decline in jobs in transport/ storage (-2.9k) argue against any suggestion that a broadly based surge in domestic spending might be taking hold.
The improvement in domestic-oriented activity and employment has also contributed to a further decline in long term unemployment. As a result, the fall in the long term jobless rate to 6.4% compared to 7.6% a year earlier has been marginally greater than the fall in the overall jobless rate to 11.1% from 12.2% over the same period.